Many companies underestimate the cost of managing software applications and systems supporting their software applications. In fact, the annual costs of administering software applications and the cost of managing issues around performance, changes and availability, most likely represent significantly greater costs than do the original software application purchase prices. Understanding the cost of software, therefore, means tracking all related expenditures across an application's life cycle. This may include purchase or lease payments, implementation expenditures, training costs, support and maintenance fees, as well as subsequent upgrades for essentially every major software application.
In today's business environment, however, assessing and understanding the true costs of software is much easer said than done. To confound the problem, some system integrators deliberately obfuscate the whole price issue by bundling the cost of the software in with their services, quoting one, all-inclusive price for their integrated system. For large organizations, these custom integration projects often run into lump sums of millions of dollars. However, these organizations still have no idea how that lump sum is divided and expended.
Another problem with existing enterprise software support applications costing models relates to most costs models being constructed as original models at the time that an enterprise considers purchasing these software applications. As such, no standard approach is known for considering the many variables associated with the different services an enterprise may require, the different numbers and types of users within an enterprise, the different sizes of databases with which the software services must interface, or the different complexities inherent in serving a particular enterprise. Accordingly, a software service cost estimate from one software application service provider simply cannot be compared reliably with a software service cost estimate from another software application service provider. This lack of reliable standards in estimating software service costs results in market confusion, inefficient pricing models, and losses on both sides of the software service transaction.
One attempt to address this concern requires software application purchasers to pay for software licenses and the services associated with enterprise software support applications under a tiered structure. These tiers reflect graduated numbers of users who are likely to use the application. However, due to many circumstances, it is not infrequent that an enterprise will purchase more software application licenses and more support service resources than they require, on the one hand. On the other hand, it is not infrequent that more than the licensed number of employees will access and use a licensed software application. This can result in both breach of the software license and an unjust benefit to the licensee.
A still further problem with known ways of providing enterprise software support applications is a general inability to dynamically take into consideration that the enterprise using these software applications are vibrant, changing, evolving entities. Companies acquire other companies, change as their market changes, and add and remove employees every day. As a result, oftentimes in an application services environment the need arises to reconstitute, rearrange, and otherwise manage the provision of software services supporting a particular enterprise as the enterprise changes.
For these reasons, there is a need to relate both the enterprise software applications and the services supporting the software applications more closely to needs of the enterprise base of software system users.
Historically, the process for assessing the needs for, and associated costs of, enterprise system software support and maintenance has been to use a single solution for a single set of problems. That is, the way of deriving estimates relating users to support service requirements has been an ad hoc or, at best, a straight line method. Such methods seek to extrapolate costs derived from a first set of users and an associated observed service support level to costs expected from a second different set of users with different requirements and usage patterns.
Unfortunately, an enterprise does not change in a straight-line path, so attempting to assess or estimate software application support and maintenance costs in a straight-line path fails as a management tool. Such a practice derives, at best, a very rough approximation and, at worst, a totally fallacious and misleading value. Inaccuracies can result in either an unjust or undue cost for the enterprise or, alternatively, a significantly reduced profit margin for the enterprise software support applications provider. As should be expected, using such fallacious and misleading cost information for important and pivotal business decisions can have highly detrimental results.
Accordingly, there is a need for an improved process for achieving reliable cost estimates for use in budgeting and monitoring the costs of enterprise software support applications support.
A need exists, therefore, for an improved method and system for evaluating enterprise software costs according to the user base of a given enterprise.
A further need exists for an enterprise software costing method and system that determines costs associated with using and maintaining an integrated-set of enterprise software support applications.